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Strategies for Acceleration: Strengthening User Pull
The workshop’s second session focused on the challenge of moving energy technologies from laboratory to market in the U.S. Department of Energy’s (DOE’s) energy innovation system. Jetta Wong, JLW Advising, introduced the session, calling attention to the fact that DOE is effective at “technology push” but could benefit from more focus on “user pull.” Walter G. Copan, National Institute of Standards and Technology (NIST), described NIST’s innovative models of partnership designed to encourage cooperation and establish demand. Christopher D. Gould, Exelon, spoke about Exelon’s experience collaborating with Argonne National Laboratory (ANL), resulting in the evolution of a unique venture fund that supports early validation and follow-on for promising technologies. Paula Gant, Gas Technology Institute (GTI), reflected on DOE’s evolving mission and the role hydrogen can play in future clean energy systems. Richard Kauffman, New York State Energy Research and Development Authority (NYSERDA), explained the activities New York is engaging in to establish large end markets for clean technology, such as attracting industry through a significant economic prize. Following the presentations, Wong directed questions and moderated discussion among the presenters.
JETTA WONG
President, JLW Advising
Drawing from the first session’s discussion, Wong summarized the U.S.’ need to be more strategic in moving energy technologies to market.
She emphasized that because of the climate crisis, we cannot wait for technologies to bubble up naturally from laboratories and universities. The United States is a world leader in discovery science for energy technologies and has a strong history of technology push. “Technology push” is when research and development (R&D) in new technology is driving the development of new products. Yet the United States has a difficult time moving energy technologies from laboratory to market in part because DOE’s energy innovation system does not scale new technologies well. The United States needs more and better developmental support for new technologies coming out of laboratories, and it needs to professionalize the later stages of innovation by focusing R&D on solutions to commercial user problems—this will create more “user pull” for the technology. The focus of this session is how to strengthen the role of commercial users in DOE’s energy innovation process and how commercial users can inform all stages of the innovation process from R&D to demonstration and deployment.
WALTER G. COPAN
Director, National Institute of Standards and Technology
Copan explained that NIST has a unique role in promoting and reporting on the overall strength of federal technology transfer efforts. The 2019 green paper Unleashing American Innovation, produced through NIST’s Return on Investment Initiative, contains 15 key findings to inform actions that will help to remove unwarranted impediments to innovation at the public-private sector interface and streamline and accelerate technology transfer.1 The paper contains a series of findings emphasizing the importance of user pull, including findings related to copyright of government software, expanded partnership mechanisms, and access to federal technologies, knowledge, and capabilities. Removing barriers to partnership is key to enhancing user pull because it creates a culture of openness and connectedness with the private sector, said Copan.
Copan described the three elements of user pull as (1) fostering a culture that embraces innovation, (2) building relationships that span both personal and institutional connections, and (3) engaging in an innovation ecosystem that includes entrepreneurship, investment, and industry associations. Copan provided numerous examples to illustrate unique models for partnership with the private sector. Both the Quantum Economic Development Consortium and nSoft Consortium leverage
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1 NIST, 2019, Unleashing American Innovation, Special Publication 1234, https://nvlpubs.nist.gov/nistpubs/SpecialPublications/NIST.SP.1234.pdf.
the insights, expertise, and feedback from industry to lead collaborative efforts in bridging the research and commercial enterprise. Copan added that through leadership in the Advanced Manufacturing Office, NIST focuses on creating the enabling environment for collaborations to advance research into the manufacturing sector. Public-private partnerships such as Manufacturing USA, the network of linked manufacturing institutes, create neutral collaboration spaces that help bring technologies to the marketplace (Figure 2.1).
NIST’s involvement with programs related to standards, smart grids, cybersecurity, and quantum sensors shares the common thread of prioritizing engagement with the private sector to create user pull through the formation of relationships, sharing of information, and development of use-cases. Copan elaborated that several programs initiated at NIST include a focus on maturing technologies from the laboratory to marketplace. For example, the Maturation Accelerator Program uses private sector review to recommend laboratory and academic investments to better enable commercialization. In conclusion, Copan stressed NIST’s focus on innovation ecosystems in recognition that institutes, industry, and universities are part of a broader environment that can stimulate user pull through awareness, relationship, and participation in the venture investment process.
CHRISTOPHER D. GOULD
Head of Corporate Strategy, Chief Innovation and Sustainability Officer, Exelon
Gould spoke about generating user pull from the perspective of an energy corporation active in the venture capital and R&D space. In 2016, Exelon and ANL formed a 5-year cooperative R&D agreement focused on identifying next-generation battery storage technologies. The collaboration, Gould said, ultimately led to the launch of a public-private partnership between ANL, entrepreneurs, and strategic investors that evolved into a unique venture fund. The fund bridges ANL’s deep technical expertise through a Cooperative Research and Development Agreement (CRADA) while involving strategic investors in early validation and follow-on. The strategic investor cohort represents many different sectors, including electric utilities, materials, and mobility. This establishes a highly developed ecosystem for commercialization not hinged on a single sector.
This structure proved extremely effective for technology innovation, said Gould. Due to ANL’s role in testing and validation, the risk typically associated with investments in the physical aspects of clean technology development is reduced. This approach can incentivize more investments. Much like the Technology Maturation Accelerator, the push was generated from involving strategic investors at the beginning of the innovation pipeline. Early collaboration around where opportunities exist ensured that the “labs were not a hammer looking for a nail,” said Gould. This partnership helped fill the gap between proof of concept, manufacturing, and scale-up.
PAULA GANT
Senior Vice President, Corporate Strategy and Innovation, Gas Technology Institute
Gant framed her remarks with the dual imperatives of decarbonizing energy systems while supplying the energy needed to support economic growth globally. DOE’s mission has shifted, explained Gant, from a focus on optimizing supply and efficiency to one of accelerating clean and resilient energy systems. As DOE makes this transition, there is a need to think structurally about how it activates most effectively, engages the national innovation ecosystem, and leverages the resources to reach deployment of clean energy technologies at scale.
This shift in mission requires considering how to enable the types of disruptive transitions needed to decarbonize and grow our economies,
said Gant. For example, hydrogen has the potential to become a significant energy carrier globally in the 2050 time frame (Figure 2.2).
While hydrogen is positioned to take an increasingly central role in the energy future, its potential is not reflected in how it is organized within DOE, said Gant. DOE has taken some important steps in recognizing hydrogen’s opportunity and the strong emerging interest among industries, notably through a series of recent webinars.2 However, hydrogen is split between many offices within the department and, as a result, signals to the national laboratories and public-private partnerships are muddled. Gant observed that opportunities exist for structural adjustments around how DOE activates on hydrogen, connects with private capital, and engages with the industrial community. She stressed that it is imperative to act quickly to jump-start a hydrogen economy to enhance U.S. competitiveness. Gant concluded that by deploying hydrogen, carbon-neutral fuels, and chemicals in ways that build on existing infrastructure and systems, the United States can reduce costs, lower risk, and provide pathways to economy-wide deep decarbonization that support growing economies worldwide.
RICHARD KAUFFMAN
Chairman, New York State Energy Research and Development Authority
To begin, Kauffman described barriers to the adoption of innovative clean energy technology as mature markets served by entrenched competitors, high costs, and variable government policy. An old view of government policy, Kauffman explained, is one that responds to the high costs of climate solutions by repeated funding of innovation, demonstration, and first-of-a-kind projects. This strategy neglects investment in deployment required to overcome the technology “valley-of-death.” An evolving policy reflects an increasing awareness of the relationship between markets, innovation, scale, and costs.
Kauffman explained that when governments create an economic prize through the development of a large end market, technology costs decrease and performance increases. There is little government policy can do to reduce hard costs, but there is significant opportunity to influence soft costs, which often are greater (Figure 2.3). For example, utilizing Solarize Campaigns, New York reduced solar customer acquisition and installation costs through the creation of community buying groups.
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2 For more information on DOE’s hydrogen webinars, see https://www.energy.gov/eere/fuelcells/hydrogen-and-fuel-cell-technologies-office-webinars.
NYSERDA applied these lessons to the development of the offshore wind industry. New York established a large end market opportunity within the state to attract industry, which in turn invested in enabling infrastructure, including bases, structural mechanisms, and port infrastructure. In collaboration with DOE, New York encouraged collaboration with other states. This friendly competition expanded the regional market potential of offshore wind, creating an even larger economic prize to attract industry. To further reduce costs and accelerate development, the state worked with representatives in relevant agencies to both identify sites and perform fishing, environmental, and shipping studies. Development time and costs were reduced even further through the community engagement activities based on the studies. Last, New York mobilized a supply chain by increasing visibility for developers to ease the ability of procurement.
Through the establishment of a market, the creation of an R&D center, and the engagement of industry, New York established an environment where the cycle of innovation can accelerate. Looking forward, Kauffman closed, the state hopes to apply similar strategies to hydrogen.
DISCUSSION
Following the speakers’ remarks, Wong moderated a discussion session that covered crosscutting approaches, the role of standards, public-private collaboration, and reducing risk in the innovation cycle.
Crosscutting Approach
Wong asked the panelists for their thoughts on crosscutting efforts, such as DOE’s Energy Storage Grand Challenge, and how DOE can institutionalize such activities. Copan responded that NIST’s integrated systems approach is similar to the organization of DOE’s Grand Challenge. DOE is on the right track, said Copan, as building on these elements of supply chain, manufacturing, and workforce have been essential to the cultural transformation at NIST. A systems approach to energy storage involves thinking beyond individual sectors, said Gould, and involving a broad coalition of partners across sectors is critical to advancing on this path. Kauffman agreed that the focus of R&D efforts must be considered in relation to the end market. For example, he encouraged DOE to produce model regulations that incentivize a utility business model that better embraces storage and innovation.
Role of Standards in User Pull
Wong wondered where enhanced measurement and verification of standards can accelerate user pull for energy technologies. Standards drive markets and consequently adoption, responded Copan. Consensus-based standards formulated with the engagement of industry, such as Energy Star, LED standards, and building performance standards, dramatically increase entrepreneurial solutions, build trust, and accelerate deployment and adoption.
Public-Private Collaboration
Asked about his experience engaging with the national laboratories from the perspective of a private company, Gould explained that the motivation for collaboration was to leverage the laboratories’ intellectual capital and unconstrained technical visioning. DOE’s CRADA and
research agreements are highly structured around specifics, limiting the ability to formulate broad, open-ended, collaborative contracts. Gould advocated for advancing CRADAs to incorporate the flexibility that is so valuable in the process of developing innovative solutions.
Copan spoke about strategies to further develop collaborative relationships between the national laboratories, industry, and universities. He highlighted the Defense Advanced Research Projects Agency and Advanced Research Projects Agency–Energy focus on teaming, and the innovative structures coming out of NASA and the U.S. Department of Defense. “Relationship-based agreements can create spinoff opportunities that are the unexpected products of collaboration,” said Copan. He reflected on the changing structure of innovation, noting that we are now in the era of open innovation and co-development as opposed to the previous highly segmented process between the laboratories and the end market.
Kauffman described how New York worked with the offshore wind industry and utilities to determine the necessary elements for scaling. NYSERDA has tried to evolve from providing grants to support individual projects to finding the point of leverage where public dollars can be most successful in enabling a market, explained Kauffman. This approach is focused on influencing soft costs and state/local government engagement with market actors.
De-Risking the Innovation Cycle
Gant commented on the mid-cycle gap that exists where promising technologies run into barriers at the point of scale-up and early market adoption. To fill that gap, Gant suggested work with the DOE Loan Program Office (LPO) and funding programmatic offices across DOE engaged in early-stage development. That work should leverage LPO’s commercial project finance expertise and established rigorous validation approaches to technologies earlier in the development process. Second, Gant encouraged the establishment of a funding mechanism within LPO to support robust, front-end engineering commercial development concepts. Last, Gant stressed the role of consortia as a proving ground for technology. As a model, at GTI, a variety of investors and regulators collaborate to demonstrate a technology and integrate it into operational practices. This reduces risk and increases trust and awareness, which better enables moving technologies to market.